Pebblebrook Grabs The Nines Hotel in Portland, Ore.
- Jul 19, 2014
In order to further expand its presence in downtown Portland, Ore., Bethesda, Maryland-based Pebblebrook Hotel Trust has acquired The Nines Hotel for $127 million.
The 331-key luxury hotel is located on SW Morrison Street, across from Pioneer Square, one of the most visited sites in the city, in the center of downtown Portland. The asset will keep its association with Starwood’s Luxury Collection brand and continue operating under Sage Hospitality and sage Restaurant Group.
The hotel is a stone’s throw from Pioneer Place mall, Saks Fifth Avenue, Nordstrom and several other venues of the Portland Center for the Performing Arts. The hotel is also close to corporate vendors such as US Bank, Deloitte, NRC, Wells Fargo, Intel, Nike and other institutions.
“The hotel’s excellent downtown location and strong operating fundamentals, including its position as the market’s rate leader, make this acquisition an outstanding addition to our high-quality portfolio,” said Jon Bortz, chairman & CEO of Pebblebrook Hotel Trust in a news release.
Pebblebrook acquired a fee simple condominium interest in The Nines Hotel. In conjunction with the purchase, the company is assuming three, non-recourse loans totaling $50.7 million, subject to a weighted average interest rate of 7.4 percent, each maturing on March 5, 2015, according to the news release.
The purchase of The Nines Hotel brings the company’s total portfolio to 31 and third investment in downtown Portland Oregon. A year, earlier, Pebblebrook acquired the Hotel Modera near Portland State University for $47.5 million, according to Portland Business Journal. Pebblebrook also owns Portland’s Hotel Vintage Plaza, a Kimpton Hotel.
In 2013, The Nines operated at 88 percent occupancy, with an average daily rate of $193 and room revenue per available room of $170.
Pebblebrook will invest $6-$8 million to revamp the guestrooms and public areas starting in the fourth quarter of 2015.
The hotel company predicts its new asset will generate between $12 million and $12.6 million over the next year, with net operating income after capital reserves of between $10.4 million and $11 million, according to the Portland Business Journal.
According to travelportland.com, The Portland metro area welcomed 8.4 million visitors in 2013, who generated $4.2 billion in direct spending.
“Portland is one of the strongest hotel markets in the country right now. Hotel demand continues to be strong and we’re seeing healthy increases in room rates, but not a lot of new supply in the pipeline,” Raymond Martz, Pebblebrook Hotel Trust’s CFO told Commercial Property Executive. “The local economy is beginning to hit on all cylinders with employment improving and more companies relocating or starting up in the downtown market.”